Indiana can't afford not to expand Medicaid

February 22, 2013|By Dr. RICHARD FELDMAN

The Supreme Court ruled that the Affordable Care Act cannot compel states to expand their Medicaid programs. If Indiana declines to enlarge Medicaid, it will leave $1.7 billion per year of federal money on the table and 363,000 newly eligible people without health insurance. Indiana's conservative political climate poses this real possibility.

Currently, 860,000 Hoosiers are uninsured. These individuals do not typically receive preventive health services, delay seeking medical care until conditions become more advanced and have a higher mortality rate. They are more likely to lack a regular health care provider and to utilize emergency rooms for routine illnesses. Their care is more expensive and they are much less likely to have the resources to pay the bills. Who pays for this care? Through cost shifting, the insured pay for the uninsured. We can't afford to expand Medicaid? We can't afford not to.

The ACA significantly increases the Medicaid eligibility for adults to 138 percent of the federal poverty level. If all 50 states implemented the Medicaid expansion, it would cover an additional 21 million or about half of America's uninsured. These individuals are largely the working poor laboring at minimum wage to support and feed their families. Under the ACA, wage earners with incomes from 100 to 400 percent of poverty will qualify for federal subsidies to assist buying health insurance. But in a state that declines expansion, the poorest workers making more than the current state Medicaid eligibility threshold up to 100 percent of poverty will be left in a gap of coverage assistance.

Medicaid expansion would not only benefit the health of working low-income families, but according to a study by the University of Nebraska Medical Center expansion in Indiana would annually generate up to $3.4 billion in new economic activity, increase state and local tax revenues by $108 million and finance 30,000 additional jobs through 2020.

Nonprofit hospitals, important community economic engines that provide much of the care for the poor and uninsured, will suffer a substantial financial blow without expansion. In anticipation of the passage of the ACA, hospitals agreed to forgo their "disproportionate share" of funding that provided compensatory payments for care they provided on a reduced payment basis, expecting in exchange increased Medicaid revenue from greater numbers enrolled.

The entire cost of health care services from the Medicaid expansion will be paid by the federal government for the first three years beginning in 2014. Thereafter, the federal share will decrease to 90 percent by 2020. States are free to reverse their participation at any time. A good deal.

With expansion, a recent Kaiser Foundation report projects Indiana drawing down $17.3 billion in new federal funds with only a modest additional cost to the state of $537 million over the next decade. Another report from the Robert Wood Johnson Foundation estimates the additional state spending would increase just 2.5 to 4.8 percent over the next six years. If Indiana rejects expansion, Indiana tax dollars, rather than benefiting Hoosiers, will go to other states to support their expansion programs.

Gov. Mike Pence and most Republican lawmakers are loath to expand traditional-styled Medicaid. Two bills have been introduced with alternative expansion models that would provide for greater state programmatic autonomy and the patient accountability and cost-sharing characteristics of the Healthy Indiana Plan. But so far HIP has been rejected by the federal government as a Medicaid alternative. If the state and the feds remain uncompromising, Indiana's expansion opportunity could be lost.

Existing dollars have been identified as possible funding sources for Medicaid expansion including redirected money from the anticipated dissolution of the state high-risk insurance program.

To pass on this opportunity would be fiscally imprudent and morally wrong.

Richard Feldman is director of medical education and residency training at Franciscan St. Francis Health in Indianapolis.